English Regulator Opens Consultation On Blockchain Technology

English Regulator Opens Consultation On Blockchain Technology

The British regulator FCA opened a debate on the risks and benefits of Blockchain technology (DLT) with a discussion paper published yesterday. “Di

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The British regulator FCA opened a debate on the risks and benefits of Blockchain technology (DLT) with a discussion paper published yesterday.

Distributed ledger technology (DLT) is an example of rapidly developing technology which offers exciting potential to support the needs of consumers and the market. DLT may also present new challenges and potential risks. For example, how regulated firms allocate responsibilities for systems shared among them.”, as the paper explained on page 5.

“We generally take a ‘technology neutral’ approach to regulating financial services and are interested in considering whether there is anything distinctive about DLT which would require us to take a different approach.”, added the regulator on page 5 of the discussion paper.

According to Christopher Woolard, Executive Director of Strategy and Competition at the FCA: “as long as firms are developing innovative products, services and solutions that offer better outcomes for consumers, we’re open for business.”, as cryptocoinnews.com noted.

A historical regulatory paper?

The authors of the paper appear very knowledgeable about the blockchain technology. The online media even called the research “the most detailed regulatory paper on blockchain technology written son far”.

The UK is the only English speaking jurisdiction that doesn`t apply double taxation to digital currency transactions. In addition, they were the first to create a sandbox that has been copied across the world.

Thus, the outcome of this consultation may set a legal framework to be copied across the world.

The regulatory paper invites a discussion on two set of issues that are being presented on page 8:

• What new risks and opportunities does DLT present to our statutory objectives of market integrity, consumer protection and competition? Can DLT support more effective competition, financial system integrity and deliver better consumer outcomes? How can regulated firms mitigate any risks?

  • Do any of DLT’s characteristics make it challenging to fit DLT solutions into the regulatory framework, despite our approach of ‘technology neutrality’?”

It is interesting to see what would be the responses and whether they can lead to changes to the British regulatory framework.

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